Corporations and Partnerships with Respect to Ribbit: Difference between revisions
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# It is forbidden to charge or take interest from an individual Jew or group of Jews. Some poskim allow borrowing or lending on interest to a partnership of Jews and non-Jews if the non-Jews comprise at least half of the group to which one is lending or from which one is borrowing.<ref> The Shoel V’Nishal (Mahudra Kama 3:31) writes to Rav Shlomo Ganzfried, author of the Kitzur Shulchan Aruch, that he held that it was permitted to borrow or lend with interest from a partnership between Jews and non-Jews. He thought that since the partnership signs under the title of an entity and not individuals it is permitted according to Rashi and those who hold that lending on interest through a messenger is permitted. Further, even according to those who argue with Rashi, he thought that it was permitted if there are non-Jews in the group so that the Jews can say that they only profited from the non-Jewish borrowers and not the Jewish borrowers. Rav Yitzchak Schmelkes in Beis Yitzchak (v. 2 Kuntres Acharon no. 32) qualifies the Shoel V’nishal’s permit to cases where there are a majority or at least half non-Jews. Mishneh Halachot 6:145 and 13:130 permits borrowing or lending from banks that have a minority of Jewish shareholders because the Jewish shareholders don’t have a say in how the bank runs. The Maharam Shik YD 158 argues with the Shoel V’nishal’s logic; see there for his leniency with other conditions. </ref> | # It is forbidden to charge or take interest from an individual Jew or group of Jews. Some poskim allow borrowing or lending on interest to a partnership of Jews and non-Jews if the non-Jews comprise at least half of the group to which one is lending or from which one is borrowing.<ref> The Shoel V’Nishal (Mahudra Kama 3:31) writes to Rav Shlomo Ganzfried, author of the Kitzur Shulchan Aruch, that he held that it was permitted to borrow or lend with interest from a partnership between Jews and non-Jews. He thought that since the partnership signs under the title of an entity and not individuals it is permitted according to Rashi and those who hold that lending on interest through a messenger is permitted. Further, even according to those who argue with Rashi, he thought that it was permitted if there are non-Jews in the group so that the Jews can say that they only profited from the non-Jewish borrowers and not the Jewish borrowers. Rav Yitzchak Schmelkes in Beis Yitzchak (v. 2 Kuntres Acharon no. 32) qualifies the Shoel V’nishal’s permit to cases where there are a majority or at least half non-Jews. Mishneh Halachot 6:145 and 13:130 permits borrowing or lending from banks that have a minority of Jewish shareholders because the Jewish shareholders don’t have a say in how the bank runs. The Maharam Shik YD 158 argues with the Shoel V’nishal’s logic; see there for his leniency with other conditions. </ref> | ||
==Partnership between Jews== | ==Partnership between Jews== | ||
===Jewish Partners Borrowing from the Bank=== | |||
# It is forbidden for several Jews, two or more, to borrow from a bank or non-Jew with interest such that the non-Jew can collect from any one of them. The reason is that if one of them pays then the others are obligated to repay the one who paid the interest. Thereby the one who paid would be like he lent everyone else with interest and is being repaid with interest.<ref>Chavot Daat 170:1, Chelkat Binyamin 170:25 based on Graz 64 and Chavot Daat</ref> Solutions include: specifying that if one of them pays on behalf of everyone that everyone will repay the one who paid the capital and not interest and the one who paid the bank or non-Jew will lose out on the interest. Another solution is to specify with the bank or non-Jew that every borrower is only obligated up to a specific amount and there's no obligation of one borrower for another.<ref>Chelkat Binyamin 170:25</ref> | |||
# If a Jew borrows on behalf of a Jewish partner or Jewish company from a bank or non-Jew with interest and then uses the partner or company's money to repay the loan that is considered interest. This is forbidden since the one signing is considered to have borrowed with interest and when he invests that money with the partner or company he is further lending it to another Jew with interest.<ref>Taz 170:3</ref> However, it is permitted if they originally borrowed in the name of all the partners or the entire company (aside from the other issue of the previous halacha, that one borrower can't be responsible for the entire loan).<ref>Chelkat Binyamin 170:25</ref> | |||
# If a Jew borrows on behalf of a Jewish partner or Jewish company for a bank or non-Jew with interest as an investment to the partnership or company and he is working in the partnership or company some poskim are lenient.<ref>Taz 170:3 is lenient. Chavot Daat 170:1 is strict unless the other partner is unaware of the fact that the partner borrowed with interest. Also Chavot Daat is only lenient to pay the interest with the profits.</ref> The halacha is that it is permitted to pay off the interest from the profits that were made with the money that was invested but they should not be taken from the partnership or company if the interest is greater than the profits made from that money.<ref>Chelkat Binyamin 170:25 based on Graz</ref> | |||
===Preferred Payment and Non-Working Partners=== | |||
# If Jews go into a partnership and both invest in the business, according to Ashkenazim, the business can pay out its investors in any payment structure it likes since it is a partnership and not a investment by one party with another party. According to Sephardim many say that this is an iska and unless the laws of iska are followed it is interest.<ref>Rama 177:3, Shach 177:13. | # If Jews go into a partnership and both invest in the business, according to Ashkenazim, the business can pay out its investors in any payment structure it likes since it is a partnership and not a investment by one party with another party. According to Sephardim many say that this is an iska and unless the laws of iska are followed it is interest.<ref>Rama 177:3, Shach 177:13. | ||
* Rambam Sheluchin Vshutfin 6:1 includes the laws of a Jewish partnership with the laws of an iska. Therefore, in order for a partnership to pay its partners permissibly and avoid interest they would need to follow all of the laws of iska. However, the Smag 82 and Rif (Shaarim Shevuot 8) argue that a partnership is fundamentally different than an iska investment. In an iska there is one investor and one agent and since the agent is also profiting it is considered part loan. If the agent is working on behalf of the investor to invest the money then it is problematic as that work is being done in compensation of the loan granted to him by the investor, thereby being considered interest. On the other hand, a partnership is where each party invests their own money and the business uses that capital. Since there was no loan, it is permissible for the partnership to pay its partners in any fashion. The Gemara Bava Metsia 69a seems to address this situation but can be read by all rishonim. See Bet Yosef 177:3 and Kesef Mishna on Rambam Sheluchin 2 s.v. vim for discussion. Milveh Hashem cites the Rabbenu Yerucham (Netiv 8) on the side of the Rambam and Ritva b"m 69a on the side of the Rif. | * Rambam Sheluchin Vshutfin 6:1 includes the laws of a Jewish partnership with the laws of an iska. Therefore, in order for a partnership to pay its partners permissibly and avoid interest they would need to follow all of the laws of iska. However, the Smag 82 and Rif (Shaarim Shevuot 8) argue that a partnership is fundamentally different than an iska investment. In an iska there is one investor and one agent and since the agent is also profiting it is considered part loan. If the agent is working on behalf of the investor to invest the money then it is problematic as that work is being done in compensation of the loan granted to him by the investor, thereby being considered interest. On the other hand, a partnership is where each party invests their own money and the business uses that capital. Since there was no loan, it is permissible for the partnership to pay its partners in any fashion. The Gemara Bava Metsia 69a seems to address this situation but can be read by all rishonim. See Bet Yosef 177:3 and Kesef Mishna on Rambam Sheluchin 2 s.v. vim for discussion. Milveh Hashem cites the Rabbenu Yerucham (Netiv 8) on the side of the Rambam and Ritva b"m 69a on the side of the Rif. | ||
